Welcome to the cold blast. I understand that this morning Dame Cheryl said that hon. Members should wear their coats and hats as they saw fit, and there is no reason for me to dispense with that advice.
Clause 27

With this it will be convenient to discuss amendment 25, in clause27,page20,line40,at end insert—
‘(2A) The review of the humanitarian impact under subsection (2)(b) must be conducted according to the methodology set out in Chapter 5 of the UN Inter-Agency Standing Committee’s Sanctions Assessment Handbook: Assessing the Humanitarian Implications of Sanctions, published in 2004.”
This amendment, which is consequential on Amendment 24, would require the Government to carry out a humanitarian impact assessment when reviewing the regulations issued under section 1.

Helen Goodman: I beg to move amendment 26, in clause 27, page 21, line 8,at end insert—
“(d) the steps taken to promote the adoption of sanctions on a multilateral basis;
(e) a summary of any representations made in relation to the exercise or proposed exercise of the powers and the response of the appropriate Minister to the same;
(f) a review from the Independent Reviewer, appointed pursuant to section 20 of the Terrorism Prevention and Investigation Measures Act 2011 (‘the 2011 Act’), of the operation of this Act in the reports by the Independent Reviewer produced pursuant to the 2011 Act.”
This amendment would require the review of regulations to include consideration of the steps taken to promote the adoption of sanctions, a summary of the representations made in relation to powers under this Act and an independent review of the operation of this Act.
I will not press the amendment to a vote, but moving it gives me the opportunity to make a couple of points and perhaps to ask a question. Proposed new subsection (d) takes us back to whether we accept the Foreign Secretary’s rhetoric about being independent in how we implement sanctions, or whether we know that sanctions are most effective when we do them multilaterally. It is our firm view that we should implement sanctions multilaterally and that Ministers should explain to the House what they have done to secure international consensus on them.
Proposed new subsection (e) was inspired by representations made to us by the voluntary sector, which wanted to be reassured that Ministers were listening to NGOs in their assessments. The clause says that Ministers have to explain the reasonableness of their “course of action”. That is a sensible thing to do. People will be confident that it is reasonable if they know that the views and information of NGOs have been taken into account. Mr Browder, whom the right hon. Member for Newbury referred to, was keen to have something along those lines, in order to demonstrate that the Government were in listening mode on the sanctions.
Proposed new subsection (f), with the read-across to the Terrorism Prevention and Investigation Measures Act 2011, was also part of our Magnitsky package of measures. Rather than having a separate amendment with a new clause, I thought it was neater to wrap it in to the review at clause 27, to which Ministers have already agreed. I thought Ministers would find it easier to agree if we made this an amendment to clause 27.

Alan Duncan: I cannot quite say that it happens in that way, although there are some issues, and of course countries being discussed in the UN—because, for instance, they may be developing nuclear weapons—obviously does come across a Minister’s desk. That happens less frequently in the case of any individuals, particularly because at the moment we do not have an autonomous sanctions regime that would make all such representations come directly to the desk of a Minister or his close officials, because we are part of the broader EU system. So, when we have an autonomous regime, I envisage that that type of thing is more likely to happen than it does now, because it tends to happen much more within the EU system at the moment.
The third issue about the amendment is the question of oversight. May I just say to my right hon. Friend the Member for Newbury that I totally understand that the two key words in what he is pressing for are “independent” and “reviewer”? He suggests the need for some kind of independent entity, force or person that perhaps represents the interests of those calling for sanctions, rather than just the interests of the Government in executing sanctions. I understand what he is saying and we will have to consider this matter further.
However, I have to be firm in my view that the counter-terrorism figure suggested in the amendment is not the suitable person to do this work. The amendment is about counter-terrorism, if it is counter-terrorism, but this measure is more broadly about sanctions. So what would happen under the amendment is that someone whose job at the moment is counter-terrorism would have their job widened. It may be too burdensome; the whole job description would have to be changed. They would not necessarily have the required skillset, so they would be the wrong person to try to designate for this purpose. In simple language, they are not the right horse for the course. However, given what my right hon. Friend has said, we will of course need to discuss this matter further, as we approach Report.

Alan Duncan: I both thank and congratulate my right hon. Friend for the elegance with which he has made his point, and I can say in clear and simple language, “Message received”.
Perhaps I can also take this opportunity to inform the Committee, in a little more detail, our feeling and understanding of what we know are the independent oversight powers in the Bill, because they are a central part of the broader picture of oversight.
We think the Bill finds the right balance of powers and independent oversight of those powers, because—rightly—the powers to impose sanctions are placed in the hands of the Executive. As such, the Government will decide whether or not to impose sanctions and on whom. Likewise, in the first instance the Government will decide when to lift sanctions. That is in line with the standard practice of the Executive deciding foreign policy and is consistent with international practice.
However, the role of the courts—as the independent arbiter and judicial authority overseeing the powers in the Bill—is significant. The courts can look at decisions made by the Government under the Bill and judge whether those decisions were correct. If not, the courts’ judgment will of course be binding on the Government. Furthermore, the Bill has significant transparency requirements and the Minister has numerous reporting obligations to Parliament. The reports will all be laid before and scrutinised by Parliament. As is the case now, parliamentary Committees can produce their own independent reports and can take evidence and make recommendations. That will continue. There is far more scope for such independent oversight by Parliament than there is now, where decisions are taken in Brussels and there are limited reporting requirements to the UK Parliament. As such, we believe that the Bill finds the right balance of Executive decision making, independent judicial arbitration by the courts and independent political oversight and scrutiny by Parliament.

Alan Duncan: There are many stages to be gone through before it ever needs to go to court. One of the issues that I really pressed hard for in the preparation of the Bill was that there could be swift and direct redress for someone caught up in sanctions unfairly—as they might see it—who needs to defend themselves but does not have money. That is why there is a process for being able to submit arguments that say they have been wrongly caught up. If they are justified, those issues can hopefully be resolved before there is any need to go to court. The hon. Lady is making a very valid point, and, if it were the case, that is addressed in the Bill.

Richard Benyon: I will not to detain the Committee for long. The Government have an opportunity to show off their virtue here. Yesterday, we saw the first application  of the criminal finance powers to go after the people we are talking about. I gather that yesterday the courts granted us the first unexplained wealth order on a foreign person to freeze £22 million-worth of property assets in London. Within the constraints of what is wise in terms of disclosure, I think that some element of this proposal might be acceptable to the Government, although I feel that it could all be drawn together in a much simpler amendment. I refer to my earlier comments about how I think we should take that forward.

With this it will be convenient to discuss amendment 27, in clause37,page29,line39,at end insert—
‘(3) Where regulations under section 1 make provision as to the meaning of any reference in the regulations to a person “owned” or “controlled” by another person pursuant to section 50(3), the appropriate Minister must issue guidance.’
This amendment would require the Government to issue guidance setting out the meaning of a person “owned” or “controlled” by another person when regulations are issued to make provision for this purpose under section 50(3).

Alison Thewliss: We seem to be at cross purposes. The amendment is about the line further to that; subsection (2) states, further to “regulations must issue guidance”, that
“guidance may include guidance about”—
it is about the expansion of what that guidance may be.

John Glen: I will address those points in my remarks, and I will be happy for the hon. Lady to come back if she is not content at the end.
Amendment 28 would broaden the scope of guidance to areas such as providing best practice on compliance with financial sanctions and establishing effective banking and payment corridors. As I said at the start, the Government are committed to producing clear and accessible guidance on sanctions implementation and enforcement. Clause 37 requires Ministers to issue guidance about any prohibitions and requirements imposed by  sanctions regulations. There is already a mandatory requirement to provide comprehensive guidance for all those affected by sanctions and implementation.
The Government have been consulting extensively; across Whitehall, they have been meeting with NGOs and financial institutions that have asked for this guidance. I can reassure the Committee that we will give them what they have asked for. The Government do not believe that further amendments to clause 37 are needed to provide the type of guidance sought on “owned” and “controlled” in amendment 27. Where sanctions regulations contain prohibitions or requirements about entities that are owned and controlled by a designated person, we are already under a duty to issue guidance. I can reassure hon. Members that the Government already provide guidance on ownership and control and will continue doing so.
The additional guidance sought in amendment 28 would greatly extend the scope of the guidance to specific areas such as mechanisms to limit the impact of prohibitions and requirements on civilian and humanitarian activity, and establishing effective banking and payment corridors. Although I can understand the concerns of NGOs that lie behind this amendment, some of them clearly are beyond the remit of the Government to provide. For example, the Government do not have the powers to require banks to make payments on behalf of particular customer or to open new payment channels. Although I appreciate the spirit of the amendments, the Bill already caters for them insofar as it addresses matters within the Government’s control. Adding extra text to the Bill will only create confusion.

Alan Duncan: The hon. Lady makes a perfectly fair request, and I think I can give her the reassurance she is seeking. Clause 41 enables an appropriate Minister to alter the legislation to introduce new types of sanctions measures where the UK has been subject to a UN or other international obligation to do so. That, I think, is the basis of her concern, but the power is for types of sanctions measures that have not previously been predicted and therefore cannot be and are not included in the Bill.
Common types of sanctions include asset freezes, travel bans, arms embargoes and prohibitions on aviation and maritime transport. These types of sanction are included in the Bill. A recent example of where the international community developed a new type of sanction  was in the UN sanctions imposed in respect of North Korea. A recent UN resolution, which we are obliged to follow, requires that UN member states do not grant work permits to North Koreans, save where the UN agrees in advance on a case-by-case basis. That type of restriction did not exist prior to the resolution, and in the future there may be other unforeseen types of sanction that we would be under an obligation to introduce.
Under the powers in the clause, new types of sanction can only be introduced if the UK is, or has been, under a UN or other international obligation to impose them. The clause does not enable any modification to be made to the purposes for which sanctions can be made, as set out in clause 1(1) and (2). Changes will be made through regulations via the draft affirmative procedure, to ensure that Parliament is given a full role in scrutinising such changes.
The clause will ensure that we remain in close co-ordination with our international partners and can respond to changes in how sanctions are used as a foreign policy tool. That will help to maintain the UK’s leading role in this field and to address global challenges in collaboration with our partners.

With this it will be convenient to discuss Government amendment 12.

John Glen: I beg to move amendment 11, in schedule 2, page 54, line11 at end insert—
“20A (1) In this paragraph ‘relevant regulations’ means regulations under section 43 which create any offence for the purposes of the enforcement of any requirements imposed by or under regulations under section 43.
(2) The appropriate Minister making any relevant regulations (‘the Minister’) must at the required time lay before Parliament a report which—
(a) specifies the offences created by the regulations, indicating the requirements to which those offences relate,
(b) states that the Minister considers that there are good reasons for those requirements to be enforceable by criminal proceedings and explains why the Minister is of that opinion, and
(c) in the case of any of those offences which are punishable with imprisonment—
(i) states the maximum terms of imprisonment that apply to those offences,
(ii) states that the Minister considers that there are good reasons for those maximum terms, and
(iii) explains why the Minister is of that opinion.
(3) Sub-paragraph (4) applies where an offence created by the regulations relates to particular requirements and the Minister considers that a good reason—
(a) for those requirements to be enforceable by criminal proceedings, or
(b) for a particular maximum term of imprisonment to apply to that offence,
is consistency with another enactment relating to the enforcement of similar requirements.
(4) The report must identify that other enactment.
(5) In sub-paragraph (3) ‘another enactment’ means any provision of or made under an Act, other than a provision of the regulations to which the report relates.
(6) In sub-paragraph (2) ‘the required time’ means the same time as the draft of the statutory instrument containing the regulations is laid before Parliament.
(7) This paragraph applies to regulations which amend other regulations under section 43 so as to create an offence as it applies to regulations which otherwise create an offence.”
This amendment requires that where regulations under Clause 43 are made which include offences, a report specifying the offences and giving reasons for any terms of imprisonment that apply to them must be laid before Parliament.
As I said earlier, amendment 11 provides for an important safeguard that will apply when powers are used to create criminal offences. It will require the Government to lay a report before Parliament explaining the Minister’s reasons for using the powers—amendments 10, 11 and 12 are really a package—whenever a criminal offence is created in new or amended anti-money laundering regulations under clause 43.
The amendment requires such a report to be laid at the same time as the draft statutory instrument containing the relevant regulations. Regulations under clause 43 will of course be made using the draft affirmative procedure, unless they update the UK’s list of high-risk jurisdictions in connection with which enhanced due diligence measures are required. The report will therefore facilitate effective parliamentary scrutiny of changes to the UK’s AML regime and will go further than the status quo in enabling Parliament to scrutinise the creation of criminal offences through money laundering regulations.
The amendment specifies that the following elements should be included in the report: the offences that have been created and the requirements to which they refer; the good reasons why those requirements need criminal offences; the maximum prison terms for any offences created that are punishable by imprisonment; the good reasons for setting the maximum prison terms at the levels at which they have been set; and, where the creation of an offence is justified by reference to an existing offence in another enactment, reference to that other enactment.
The requirement for the Minister to demonstrate that they have good reasons for using the power ensures that it cannot be used lightly. I hope hon. Members agree that such reports will provide increased transparency about the reasons for creating criminal offences and give Members a solid basis for holding the Government to account when debating anti-money laundering regulations made under the Bill.
Nevertheless, the Government remain very aware that creating criminal offences and setting penalties in regulations is a serious matter that is not to be undertaken lightly. I am therefore happy to repeat reassurances and existing safeguards that the Government introduced in the other place. As it stands, a criminal offence can be established under clause 43 only if regulations provide either a mental element necessary for the commission of the offence or a defence to it, or both. That will maintain the existing policy position under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and preserve the deterrent effect established by criminalising breaches of anti-money laundering and terrorist financing regulations.
The amendment is an additional safeguard to the changes the Government have already introduced in response to concerns raised in the other place by Lord Judge and others. We listened to those concerns, and the amendment addresses them. It will ensure that Ministers cannot create criminal offences or set penalties —up to a maximum of two years’ imprisonment—without good reasons, and that Parliament has all the information it needs to hold Ministers to account.
That contrasts starkly with current practice, in which new criminal offences are created through statutory instruments made under section 2(2) of the European Communities Act 1972 under the negative procedure, without any need to state reasons, with no information about such reasons being provided to Parliament, and with no requirement for a vote in Parliament to approve them. The measure is, therefore, a better way of ensuring that proper safeguards are placed in the Bill, with respect to offences—rather than removing the ability to create them, and so weakening the UK’s anti-money laundering regime.